It's common, and reasonable, to invest in lots of large-cap companies, as they've typically proven themselves enough to grow large, and tend to have some competitive strengths. But it's also smart to include smaller companies in your portfolio, as the best of them can grow rapidly, as they eventually become large-caps.

More than a handful of smallish companies had strong performances over the past year. Louisiana-Pacific (NYSE: LPX) , for example soared 139% over the past year. Invesco Mortgage Capital (NYSE: IVR) jumped 67%, and sports a whopping dividend yield of 13.2%. Prospect Capital (NASDAQ: PSEC) , up 29%, is a private-equity business development company ("BDC"), specializing in energy companies, and recently yielding a huge 12%.

Source: Motley Fool

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